Last Name _______________________ GB695 Part 1 MS Word Exercises
Chapters One to Five
Chapter 1. Transportation Planning
1-1. Of the four strategic models identified in the workbook, which one is the most useful when developing strategies for a business? Explain your reasoning.
1-2. An analyst wants to build a model to predict movement of prices on the Bombay Stock Exchange. In terms of the guidelines in the workbook, is this a hard or easy task? Explain your reasoning.
1-3. A professor claims a requirement to move 10,000 tons of a chemical from Chicago to Detroit is a tactical movement. Do you agree? Explain your reasoning.
Chapter 2. Selection of a Vessel
2-1. The task of deciding whether a vessel is suited for an oceanborne movement is tricky? Do you agree? Explain your reasoning.
2-2. What is the difference between a time charter and a bareboat charter. Be specific.
2-3. The terms “on-hire” and “off-hire” in a time charter are not very significant. Do you agree? Explain your reasoning.
2-4. What is the difference between charter hire per day and charter hire per DWT per month?
Chapter 3. Capital Budgets for Ships
3-1. A capital budget does not need independent analyses for likely return and required return. Do you agree? Explain your reasoning.
3-2. Accounting should play a limited role in capital budgeting. Do you agree? Explain your reasoning.
3-3. The optimal period for a planning horizon for a shipping decision is seven years. Do you agree? Explain your reasoning.
3-4. The financial side of purchasing a ship is all about the time value of money. Do you agree? Explain your reasoning.
3-5. If an international shipping company does not pay taxes, the book depreciation schedule and residual value are meaningless. Do you agree? Explain your reasoning.
Chapter 4. Evaluating Return on an Investment
4-1. The purchase price of a vessel is different from the net cash outlay. Do you agree? Explain your reasoning.
4-2. How do we calculate the likely return from a shipping investment? Be specific.
4-3. How does an analyst determine the required return from a shipping investment? Be specific.
4-4. When the net present value equals zero, the project is neither profitable nor does it show a loss. Do you agree? Explain your reasoning.
4-5. Mid-year discount factors are appropriate for residual values but not vessel annual cash flows. Do you agree? Explain your reasoning.
Chapter 5. Annual Capital Cost of a Vessel
5-1. The annual capital cost contains a capital decline and loss of use. Both are needed to recognize the economic effects of vessel ownership. Do you agree? Explain your reasoning.
5-2. Why is a bareboat charter really similar to renting a car? Be specific.
5-3. What are the formulas in the two highlighted cells below?
5-4. What is the formula in the highlighted cell below?
5-5. What is the formula in the highlighted cell below?
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